Everyone's Talking About PayPal's Acquisition Of Xoom

eBay Inc EBAY's PayPal announced on Wednesday that it will acquire Xoom Corp XOOM, a company engaged in digital consumer-to-consumer international money transfers, for $890 million or $25 per share.

The acquisition represents an approximate 21 percent premium to Xoom's closing price on Wednesday. The deal comes ahead of PayPal's split from eBay where it will begin operating as a fully separate and publicly-traded company.

Here are what some of Wall Street's top analysts are saying about the deal.

Morgan Stanley: Xoom Gives PayPal Access To $580 Billion Market

Brian Nowak of Morgan Stanley commented in a note that PayPal's acquisition allows the company to enter the $580 billion international remittance market. The analyst noted that the market is "ripe for technological disruption."

Related Link: PayPal Is The Purest Pure-Play On Mobile Payments, Says BMO

Nowak also added that PayPal can offer its advanced platform to scale the market at a faster pace given the potential to cross-sell into its 68 million U.S. customers (versus Xoom's 1.3 million). There also exists the possibility for a longer-term expansion into new markets where PayPal already has a presence but Xoom does not.

Nowak also estimated that the acquisition will be margin dilutive for PayPal in the near-term (given Xoom's 2014 operating margins of around 4 percent) but at scale, margins could rise to around 20 percent.

SunTrust: ‘Steal Of The Century'

Andrew Jeffrey of SunTrust Robinson Humphrey commented in a note that PayPal's acquisition of Xoom "makes sense" and should bolster its franchise value. The analyst also suggested that the acquisition would "protect" PayPal from potential exclusion from Android Pay and Apple Pay wallets.

Jeffrey also added that Xoom's EBITDA growth rate "suggests it could be worth more" given its leading cross-border remittance franchise, strong market position and relatively early-stage penetration. As such, the company could see competing bids from Facebook Inc FB, SnapChat, or evena a private equity group as PayPal's proposed buyout price represents a "deep discount" to valuations of smaller private companies such as WorldRemit and Transferwise.

Mizuho: PayPal Paid A ‘Hefty' Multiple

Neil Doshi of Mizuho Securities commented in a note that PayPal's purchase price of $25 per share represents a $1.03 billion market cap or $890 million enterprise value. The analyst noted that this represents a 37x 2015 consensus EBITDA estimate and 25x 2016 EBITDA. Meanwhile, the company saw its revenue grow by only 30 percent in 2014 after growing 52 percent the previous years.

Doshi added that based on Xoom's 2015 guidance, the company expects to generate revenue of $194 million and $24 million in EBITDA – "not bad, but not stellar, in our opinion."

Nevertheless, the analyst stated that he is "generally positive" on the acquisition as PayPal would be able to cross-sell Xoom's services to its 68 million U.S. customers and leverage its platform to enable cross-border transactions between international markets.